Discounts on Vendor Central: Types and Fees

Discounts are an integral part of the sales strategy on Amazon Vendor Central. Properly setting them can increase competitiveness, attract new customers, and improve sales results. However, discounts also come with additional fees that should be considered in profitability analysis. In this article, we present the types of discounts available on Vendor Central and the fees associated with them.

Types of Discounts in Amazon Vendor Central

1. Promotional Discounts (percent off)

• Allow a percentage discount to be set on selected products, e.g., 20% off.

• Used in campaigns promoting larger purchases, e.g., "20% off all products in this category."

• You can set them at any time of the year, adjusting for seasonality or sales goals.

2. Vouchers

• Discount coupons assigned to specific products.

• They can offer a percentage discount (e.g., 15%) or a fixed amount (e.g., $10).

• Displayed on product pages, increasing their visibility and encouraging customers to purchase.

3. B2B Discounts

• Targeted at businesses, such as wholesalers or retailers.

• Discounts are available for registered business customers in Amazon Business.

• They may include different levels of discounts depending on the quantity ordered.

4. Amazon Events

• Special discounts offered during events such as Black Friday, Prime Day, or seasonal sales.

• Require prior arrangements and negotiations with Amazon, often through a Vendor Manager.

• If the introduction of a discount is rejected in the panel, it is worth contacting support or your Vendor/Account Manager.

Each type of discount offers various options to tailor the offer to the target audience and current sales goals.

Fees Associated with Discounts

Using discounts on Amazon Vendor Central involves additional costs that should be considered when calculating profitability. Here are the most important:

• Handling Fees – costs associated with managing discounts by Amazon.

• Promotion Costs – e.g., for placing products in events like Prime Day.

• Reduced Margin – discounts lower the profit on unit sales, so it is crucial to calculate their impact on overall profitability.

How to Calculate Profitability?

1. Analyse what additional costs each type of discount generates.

2. Consider the expected sales growth resulting from the promotions.

3. Weigh potential profits against the losses resulting from price reductions.

Example: Promotional Discounts in Practice

Imagine that you offer a 20% discount on a popular product during the Black Friday period. Here’s what you need to consider:

• Discount Costs: If the product costs $100, the discount is $20 on each unit.

• Amazon Fees: Add handling fees and promotional costs.

• Increased Sales: If sales increase by 50%, check if this compensates for the lower margin.

Summary: Is it Worth Using Discounts?

Discounts in Amazon Vendor Central are an effective promotional tool but require the right approach. Key points include:

• Choosing the type of discount to fit the campaign's goal and target audience.

• Considering all costs associated with discounts to ensure they are profitable.

• Regularly monitoring results and making adjustments to maximise profits.

Well-planned discounts not only increase sales but also build positive customer experiences and strengthen the competitiveness of your offer.